Bitcoin Gets Back $20,000 After $200 Million in Crypto Liquidations; Some traders brush off USDC fears

Bitcoin and Ethereum rose as much as 4% in the past 24 hours after a sharp drop on Friday as contagion risks from the collapse of Silicon Valley Bank spread to crypto markets, particularly USD Coin issuer Circle’s exposure to the bank.

Ether (ETH) rallied over USD 1,450 while bitcoin (BTC) jumped above USD 20,000 on Saturday to post early signs of market stabilization. Both tokens fell below strong resistance levels on Friday.

However, other cryptocurrencies failed to post similar gains, suggesting that traders were not yet taking risks with lesser-known tokens. Polygon’s matic (MATIC) was up 1.6%, while BNB Coin (BNB) and XRP were up 2% nominally in the Asian evening hours on Saturday.

Sudden and steep market moves occurred Friday as regulators closed down SVB during a run on the bank. Traders panicked selling their token holdings as USDC fell to just 87 cents early Saturday, triggering a sell-off as

The total cryptocurrency market cap fell below $920 billion for the first time since November, as more than $200 million worth of crypto-tracked futures were liquidated in the past 24 hours.

Nearly $60 million in bitcoin futures liquidated, most of the major cryptocurrencies, followed by $40 million in ether futures liquidations. Such liquidators likely contributed to the decline of bitcoin and ether.

Liquidation occurs when a trader has insufficient funds to keep a leveraged trade open.

Meanwhile, some market analysts dismissed the USDC’s long-standing fears by pointing to the token’s US Treasury support.

“80% of their assets are in the form of 6 million US T-bills,” wrote one Member of the Crypto Twitter community. “85% of these bills have been rolled over in the past 3 months. Interest rate risk is negative.”

Adam Cochran, partner at crypto fund CEHV, said SVB’s FIDC-insured nature suggested USDC longevity fears were overblown.

“Very comparable for the FDIC recovery process – the entity was paid out 62% of balances directly under the FDIC ‘advanced dividend’ process, and 94% was recovered at the final payment,” Cochran said. “If comparable at SIVB, then Circle’s max damage is $198 million out of $3.3 billion.”

Elsewhere, Hal Press, co-founder of North Rock Digital tweeted that 77% of Circle’s reserves were held in U.S. Treasury bills – citing official documents – meaning the theoretical floor price of USDC was 77 cents.

“Circle holds 77% of their reserves in 1-4 month T-Bills. These T-Bills are held at BNY Mellon and managed by Blackrock. This provides an absolute lower limit on USDC of 0.77,” said Press.






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